Risk Aversion

FEATURED ARTICLES ABOUT RISK AVERSION - PAGE 5

(Roy Paul, Deputy General Manager-Treasury Federal Bank) Three major concerns are currently weighing forex market sentiments. The uncertainties regarding the Greece bailout plan, toned-down expectations of a large revaluation of the yuan and the gradual shift from risk appetite to risk aversion. The cumulative effect of all above factors is likely to lead to general dollar strengthening bias and reduction of long positions in emerging market currencies. The rupee, though better placed, can be no exception.

It was the retirement party of Rakesh Chopra when his ex-boss, who had been specially invited, took him aside for a piece of advice. "Chopra, don't repeat the mistake I committed. Consequent to my retirement three years back, I invested my entire savings in mutual funds and stocks. When the need arose last year for funding my wife's prolonged illness and my son's tuition fees abroad, I was in for some harsh reality check. The market value of my investments had halved and I had to book losses to generate cash.

MUMBAI: The Indian rupee ended the day at 62.94 against the US dollar after slipping to 62.95 in intraday deals following persistent demand for American currency and weak equities. The domestic unit resumed lower at 62.50 per dollar as against the last Friday's closing level of 62.29 at the Interbank Foreign Exchange ( Forex ) market. Sustained demand for the greenback amid country's weak macro data's and capital outflows pressurised the Indian unit, a dealer said.

MUMBAI: The Indian share market, which has been among the worst performing emerging markets this year, is regaining confidence among foreign portfolio investors. Though fund managers are maintaining an underweight position, sentiment in Indian shares has improved among institutional investors, according to a survey by Bank of America Merrill Lynch. In October, India's ranking preference among fund managers in terms of investment preference has improved from a month earlier.

In an interview with ET Now, Peter Cardillo , Chief Market Economist, Rockwell Global Capital , speaks about the global market scenairo and the dollar's effect on it. Excerpts: ET Now: There is global nervousness. We may use words like riskoff, risk aversion, and flight to safety, but what exactly are markets pricing in at these levels? Are they already pricing in a disorderly exit of Greece? Peter Cardillo: Yes, indeed, there is a lot of fear about that and the talk is somewhat exaggerated.

LONDON: New York University Professor franc may be a better investment than recession since World War II is running out of steam. The Swiss franc rose to a record against the euro on August 31 and the yen last month reached its strongest level against the

Bond yields were unable to sustain an early fall on Friday, paring the move on weaker-than-expected demand at a bond auction and on uncertainty over the government's borrowing needs for 2010-11. The yield on the benchmark 10-year bond ended at 7.68 per cent, off an intra-day low of 7.63 per cent, and only slightly below Thursday's close of 7.70 per cent. "After the auction, the mood is bearish again," said a trader at a private bank. Bond yields had opened lower, with demand supported by a drop in US Treasury yields on rising risk aversion and growing surplus funds with local banks, traders said.

MUMBAI: The rupee weakened to two-and-a-half-year low on sustained euro worries and sluggish stock markets, while speculative activity in the offshore markets continued. According to dealers, RBI intervened in the markets when rupee went past 49.15 per dollar. The rupee remained highly volatile, as it opened with a gap of 48 paise at 48.76 per dollar and closed at 49.58 per dollar, a fall of about 82 paise. "The weakness is essentially due to risk aversion. The growth is suspect in the western zone.

In a chat with ET Now, Prashant Sharma , Chief Investment Officer, Max New York Life Insurance Co Ltd, shares his views on market outlook . ET Now: How would you characterise the market environment? Looks like the momentum on the upside is missing and the strength on the downside is also absent. Prashant Sharma: We have been fairly cautious on the markets for the last several months, quarters in fact. And given the overall macroeconomic environment in India, I do not see there is a reason to change our stance.

MUMBAI: The Reserve Bank today said it would deploy all available tools to respond "rapidly and appropriately" to any adverse development due to "turbulent" global situation which could have an impact on India's growth . "... recognising that the global situation is turbulent, the Reserve Bank stands ready to use all available instruments and measures to respond rapidly and appropriately to any adverse development," Reserve Bank of...